Inside This Issue - Opinion
Pessina relentless in pursuit of global vision
May 19th, 2014
Stefano Pessina, executive chairman of Alliance Boots, earlier this month demonstrated the dynamism that has made him one of the world’s most accomplished businessmen, forging a deal that will take his company into the burgeoning Latin American marketplace.
The agreement to purchase Farmacias Benavides, which operates some 1,000 stores in Mexico, and Farmacias Ahumada, which runs about 400 outlets in Chile, will make Alliance Boots one of the top three pharmacy chains in each of those countries. More important, it is a pivotal step toward the realization of Pessina’s objective of establishing a truly global footprint.
Alliance Boots’ chairman has been relentless in his pursuit of that vision. Trained as a nuclear engineer, he joined his family’s pharmaceutical distribution company in Italy and, drawing on the rigor of the scientific method, deliberately built the business into an international power in retail pharmacy, health and beauty care through a sequence of bold acquisitions. Among the most notable of those deals was the merger of Alliance UniChem, as Pessina’s company was then known, with the iconic British drug chain Boots PLC in 2006.
Today Alliance Boots has a presence in more than 25 nations; operates some 3,100 health and beauty stores, which include 3,000 pharmacies; and has a wholesale division comprised of 370 distribution centers that handle over 4.6 billion units annually. Through direct ownership, joint ventures, franchisees and product sales, the company’s reach stretches across the globe — from Asia to the Middle East and Europe and across the Atlantic Ocean to the Americas.
As those numbers prove, Pessina has largely succeeded in accomplishing what he set out to do. “In a world where globalization is increasing apace, our transformational partnerships put us together in a unique position to become the clear world leader in both pharmacy and pharmaceutical wholesaling,” he wrote in Alliance Boots’ 2012-2013 annual report. “I truly believe that we have the brands, intellectual capital and, most importantly, the management expertise to create value for our stakeholders across the world for many years ahead.”
The high point of Pessina’s career thus far is the strategic partnership that he struck with Walgreens president and chief executive officer Greg Wasson in June 2012. The deal, which has seen Walgreens assume a 45% ownership stake in Alliance Boots and put the two organizations on the road to a full merger in 2015, is designed to capitalize on the companies’ complementary strengths in such areas as pharmacy and health care services, drug distribution, front-end merchandising and brand development.
The sharing of best practices between Alliance Boots and Walgreens is central to the business model, and several key executives have already moved from one company to the other. To cite just two prominent examples: Alex Gourlay, who had been chief executive of Alliance Boots’ health and beauty division, is now in charge of Walgreens’ customer experience and daily living team, and Richard Ashworth has moved from a corporate operations role in the western United States at Walgreens to become director of health care, health and beauty in the United Kingdom and Ireland at Alliance Boots.
Perhaps the most significant achievement of the partnership is the establishment of Walgreens Boots Alliance Development GmbH, a joint venture based in Bern, Switzerland. The entity brings together the buying power of the two organizations in a variety of categories, notably prescription pharmaceuticals. Less than a year after it was established, the joint venture’s clout was enhanced when its parent companies entered into a partnership with AmerisourceBergen, which among other things gave the U.S. pharmaceutical wholesaler access to global sourcing for generic medications through Walgreens Boots Alliance Development.
The process of uniting two multibillion-dollar organizations would be enough to occupy most executives — not Stefano Pessina. The acquisition of Farmacias Benavides and Farmacias Ahumada serves as a reminder, for anyone who might need it, that Pessina is always thinking several steps ahead in pursuit of the global strategy embraced by Walgreens and Alliance Boots.